Monday, December 26, 2011

Entitlement vs. Opportunity? How about Merit vs. Wealth?

I ended up taking a bit of a vacation from blogging, but a recent Romney op-ed has sufficiently roused my ire to provoke me to get energized again.

In this op-ed, Romney attempts to claim that there is a choice between an entitlement society and an opportunity society. He also goes on to claim that Obama has overseen a vast expansion of government, a claim which has been sufficiently debunked elsewhere (the short form, GDP plunged and automatic stabilizers increased under existing law, Obama's additional spending has almost all been temporary spending). He also tries to link unemployment to this alleged increase, never mind that this is a worldwide phenomenon that seems worse in countries with weak entitlements than ones with stronger stabilizers.

My big problem with all this is I can find no empirical evidence to back up Romney's claims. I have been doing quite a bit of research on the topic, I am strongly considering researching dependency as the topic for my PhD thesis. I can find no evidence in aggregate statistics that any of the impacts of this alleged creation of dependency. It is true that government programs can reduce work, but they do this as a result of effective marginal tax rates, means testing, and the difficulty of enrollment (which makes someone reluctant to get off a program because they are unsure of their ability to succeed and are unwilling to go through all the hoops again if they fail). The solutions I've heard from those that share some of Romney's beliefs, such as Paul Ryan, strike me as tending to increase rather than decrease these problems. Reducing government spending through more means testing and tougher enrollment programs is likely to increase the number of the hardest cases, not decrease them. It will likely lead to lower spending, but these efforts tend to reduce the numbers of temporary users of government assistance, not the numbers of people unable to find permanent employment. This reduction in turn leads to an actual increase in the hard core of the most deprived, people that would have been prevented from sliding into permanent dependency with a bit of help slide down too far to get back up without it.

The biggest problem with Romney's statement is that I believe it presents a false dichotomy. Increasingly, opportunity in our society seems to depend on wealth. If we want a merit based society, it is necessary for public programs to seek to reduce the gap in opportunity between those with wealth and those without. The idea that there was a strict separation between opportunity based interventions and general egalitarian interventions that was once present in American politics seems to have been increasingly falsified by the evidence. Instead, the right has abandoned the idea that government can promote opportunity and merit entirely.

This doesn't seem to fit the evidence. Instead, we've found that egalitarian benefits programs promote opportunity. Countries that don't means test their benefits have some tendency towards lower gaps in performance between the poor and the rest, college completion rate gaps are not as wide and income mobility is higher. The problem isn't that of entitlements vs. opportunity, it looks to be more like that between merit and wealth. Without state intervention, the free market presents greatly varying opportunities to individuals with different families. Competition may be more fierce within each income bracket, and the size of the penalty for falling a notch likely makes this competition considerably more fierce and ruthlessly sorts those in the higher income brackets, but competition between income brackets becomes far less. Today we see people in big cities complaining about things like needing to afford private school to be middle class, this is the kind of thing that indicates that it is increasingly opportunity and not just consumption that is unequal. Increasingly the sins of the fathers, or the merits of the fathers if you're the glass half full type, are delivered onto the sons.

Only the very best can rise above poverty, but being not actively incompetent is enough to keep you middle class or better. As our society becomes more complicated and the need for training ever greater it becomes more difficult for our society to sort rewards by merit rather than wealth. It is necessary to step in to overcome relative deprivation in order to combat this inequality of opportunity, the alternative is that merit will be something that matters only to the very best who can overcome all obstacles and those that are in the broad middle will be sorted not by their merit relative to each other but only by their wealth.

This is what I fear Romeny's ideas will lead to. It is things like this that make me so fascinated by decadence. Something that strikes me about most civilizations is that their problems are widely known well before their collapse. Some sort of moral belief tends to interfere with addressing these problems. In our case, I think the moral belief that may bring us down is the belief in dependency and trying to sort the deserving from the undeserving poor. It is widely held, despite a severe dearth in evidence. If we follow the rhetoric being used by Romney into actual policy, the impacts are likely to be the opposite of the intent. This is the kind of course that can easily become a downward spiral, the increase in the social problems as a result of the policies reinforces the moral force of the arguments that originally lead to the policies leading towards ever more extreme institutionalization of the failing policies. This makes small problems big problems, if this continues for a long enough period of time, collapse follows. This is one way civilizations can and do fall, morality takes the place of rational policy and what should have been minor problems increase in scale and severity as a result of irrational policy. This is why I get so worked up about this particular issue, dependency is a very compelling argument to many people, but it lacks an empirical basis. It is combating a bogeyman, but combating this bogeyman has the potential to create real monsters.